Peacemaking between Israel and the Palestinians moved tantalizingly close to a final agreement in 2000 but then degenerated into violent clashes when the two sides failed to agree on sovereignty over their holy sites in Jerusalem. A 15-day summit under U.S. auspices at the U.S. president’s Camp David retreat in Maryland broke up on July 25 over the Jerusalem issue. Attempts to find a solution for the holy Temple Mount—which Jews claim as the site of their biblical temple and which Muslims call Al-Haram al-Sharif, the site of the Prophet Muhammad’s ascension to heaven—continued until late September. On September 28, in a highly publicized attempt to emphasize Israeli sovereignty, government opposition leader Ariel Sharon—accompanied by a large police contingent—paid a visit to the site, sparking widespread rioting in the Palestinian-controlled areas and among Israeli Arabs in Israel.

The unequal fighting between Israeli soldiers and stone-throwing Palestinian youths, the latter backed up by Palestinian National Authority Pres. Yasir Arafat’s Tanzim militia firing light weapons, enabled the Palestinians to gain considerable support and sympathy throughout the world. More than 150 Palestinians were killed in the first month of fighting, a quarter of them children. The Palestinians accused the Israeli army of brutality; Israel accused the Palestinians of cynically exposing children to cross fire for propaganda purposes.

Incensed at Israel’s handling of the riots and concerned about the angry demonstrations in their own countries, Arab leaders gathered in Cairo on October 21 for their first summit in four years. They issued a communiqué strongly criticizing Israel and calling on Arab nations to downgrade their relations with the Jewish state. Morocco, Tunisia, and Oman closed down low-level missions, and Egypt recalled its ambassador. The Arab states, however, stopped short of economic sanctions or military intervention against Israel.

Israeli leaders charged that Arafat, unhappy about elements in the peace package, was trying to internationalize the conflict and to render the American facilitating role less central. Some observers argued that the main stumbling block was not Jerusalem but the Palestinian refugees and that for historic and emotional reasons it was difficult for Arafat to declare an end of the conflict with less than a full resolution of that highly complex issue.

After his government received an additional 6.1% of the West Bank on March 21, Arafat was in full or partial control of 42.9% of that area, and there was speculation that, on the crest of the new uprising, he would make the unilateral declaration of Palestinian statehood that he had postponed several times. Israeli Prime Minister Ehud Barak warned that if he did, Israel would establish the borders between Israel and the Palestinian state unilaterally.

The Palestinians had been swayed into believing they could force Israel to end its occupation of the West Bank and Gaza by Israel’s unilateral pullback from Lebanon in the face of determined resistance by Hezbollah militiamen. Israel’s 18-year-long occupation of southern Lebanon ended on May 24, when it withdrew the last of its troops from its self-declared security zone. The withdrawal followed a 1999 campaign promise by Barak to pull the troops out.

In early January it seemed as though Barak might be able to achieve a negotiated withdrawal from Lebanon in peace talks with Syria in Shepherdstown, W.Va. The Syrians, however, continued to insist on an Israeli commitment to withdraw from the Golan Heights, while Israel wanted Syrian commitments in regard to security arrangements and normalization. To break the deadlock, U.S. Pres. Bill Clinton and Syrian Pres. Hafez al-Assad met in Geneva on March 26, but they made little headway. The talks focused on control of the northeastern coast of the Sea of Galilee. Assad insisted on a share of the water, a demand the Israelis rejected out of hand.

Barak’s foreign policy and its attendant failures eroded his position at home. He began the year with a comfortable coalition majority of 68 in the 120-member Knesset (parliament), but his determination to take the peace process forward antagonized his more hawkish coalition partners. In addition, constant friction between the secular Meretz party, which controlled the Education Ministry, and the ultra-Orthodox Shas party, which demanded more funding and greater autonomy for its network of religious schools, sapped the coalition’s strength.

In early July Shas, the National Religious Party, and Yisrael ba-Aliyah left the coalition, accusing Barak of being ready to concede too much to the Palestinians. Meretz, which supported Barak’s peace moves, had already withdrawn from the government over its differences with Shas, and after Barak returned from Camp David, Foreign Minister David Levy resigned, pulling his Gesher party out of the coalition. Barak was then left with a minority coalition of only 40 Knesset members.

On May 28, following allegations that he had received more than $300,000 from two millionaire businessmen friends, Pres. Ezer Weizman announced that he intended to step down in July. The attorney general decided not to prosecute because of the seven-year time lapse since the gifts had been accepted. Elections for a new president took place in the Knesset on July 31, and in a surprising result, indicative of the weakness of Barak’s governing coalition, Likud’s Moshe Katzav defeated One Israel’s elder statesman, Shimon Peres, by 63 votes to 57.

A millennium visit to the holy land in March by Pope John Paul II helped to further reconciliation between Christians and Jews. At Yad Vashem, Israel’s memorial to the Holocaust, the pope expressed deep sorrow for acts of persecution and anti-Semitism “against the Jews by Christians at any time and in any place.” Prime Minister Barak called the pope’s visit to Yad Vashem “a climax of this historic journey of healing,” and said that Israelis appreciated the pope’s “noble act most profoundly.”

In the second half of 2000, there were signs that Israel was emerging from its long economic slump. The rate of economic growth, which had fallen to just 2% in each of the previous two years, doubled, and there were a number of spectacular high-tech and export successes. Labour-intensive enterprises continued to close, however, so unemployment remained high at more than 8%. The Palestinian uprising hurt tourism, and there were fears that it would frighten investors. David Klein, who replaced Jacob Frenkel as governor of the Bank of Israel in January, continued his predecessor’s tight monetary policy and kept inflation at record lows.

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